Regional Gas and Electricity Prices
Did you know the area you live in can affect the amount you pay for gas and electricity?
Gas and electricity suppliers often charge different amounts depending on where the supply address is located, which means that when you compare energy deals, your postcode alone could see you paying more or less than a similar property in a neighbouring area.
So, why do energy prices differ by region? Will these inconsistencies affect your energy switch? And is there anything else you can do to cut the cost of your gas and electricity bills?
Why do energy prices differ by region?
The average price the energy providers in your area charge is generally influenced by three factors:
- How much energy the suppliers in your area buy from generators - An energy supplier will make predictions about consumer demand. If they need surplus energy above these forecasts, the unit costs go up, meaning you pay more for your energy.
- How much energy your supplier sells in your area - If you live in a remote area, with a limited number of households using energy, suppliers will recuperate the cost of supplying by charging more for energy in this area.
- If the local distribution network (LDN) for your area imposes additional charges on your supplier - An LDN is often used by energy suppliers to distribute energy around your region. If your region’s LDN decides to impose additional charges on your supplier, these charges will be passed on to you, through the cost of your gas and electricity.
What are the regional energy price differences?
The table below highlights the regional price differences for dual fuel energy supply:
|Region||Incumbent Dual Fuel
Bill for Region
|Cheapest Dual Fuel
Bill for Region
These figure are based on usage of 3,100 kWh of electric per year and 12,500 kWh of gas per year. Shows average price across all regions. Assumes payment is made by Monthly Direct Debit. Only showing tariffs which are generally available across most of the UK
Our figures show that Scotland pays the most, with an average annual dual fuel bill of £1,161, while East Midlands pays the least at £1,095 – a difference of £66.
When it comes to the cheapest dual fuel bill by region, South West England is the most expensive, at £819 per year, but East Midlands is the cheapest again, at just £782.
This mean energy customers based in the East Midlands are probably paying less per unit of energy than consumers in all other parts of the country.
What costs make up a typical energy bill?
On the face of it, your energy bill will be split between the amount you pay for gas and electricity, but there’s actually more to it than that – here’s how Ofgem calculates the breakdown of a typical dual fuel energy bill:
|Annual cost||Percentage of bill|
|Environmental and social obligation costs||8%|
|Supplier pre-tax margin||5%|
|Other direct costs||1%|
- Wholesale costs (38%) - These are the costs charged to energy suppliers when they buy gas and electricity. These costs fluctuate according to the changing costs of gas and oil, which can fluctuate according to anything from transport costs to global events. If you’re in a fixed contract, your rates will not be affected.
- Network costs (26%) - These cover the cost of delivering energy from power stations to your home, and also include the maintenance of supply pipes and cables.
- Operating costs (17%) – These charges cover the costs associated with running an energy company, including customer and account services.
- Environmental and social obligation costs (8%) – Government legislation requires all energy suppliers to contribute a certain amount of money to environmental initiatives, so a certain amount is added to your monthly bill to cover this cost.
- Value Added Tax (VAT) (5%) – A government tax charged on goods and services – and one you’ll be all too familiar with – which you can be charged at the standard rate or reduced rate, depending upon your usage.
- Supplier pre-tax margin (5%) - This makes up the difference between the amount your energy company takes in from you and its other customers, and the cost of delivering energy. It’s more than just profit, as your energy company will also have to pay tax, fund debt payments and meet other obligated costs from this money.
- Other direct costs (1%) – This includes include, brokers’ costs and intermediaries’ sales commissions, as well as any ‘wider’ smart metering programme costs.
The simplest way to cut the cost of your energy bills is to switch to a better deal – compare energy tariffs prices now to see how much you could save. And consider the range of discounts on offer, opting for a dual fuel deal and paying by direct debit can cut costs even further.
Then consider some changes to how you actually use energy, a few simple switches to your routine can soon add up to significant savings, so turn your thermostat down a degree or two, and draught-proof windows and doors.
If you’ve the money to do so, it’s also worth switching any standard light bulbs to energy efficient ones, as well as investing in both loft and cavity or solid-wall insulation. For even more energy-saving tips, check out How to reduce your electricity and gas usage.
Who is the cheapest energy supplier?
It's almost impossible to say who the cheapest energy supplier is, largely because prices vary according to things like your individual circumstances, the type of tariff you need and the energy efficiency of your property.
And the regional differences mean that the cheapest energy supplier Scotland will offer different rates than the cheapest gas and electrcity providers in London.
Running an energy price comparison is the only way to find the best deal for your household. To get started, pop your postcode in the box below.